Will the Federal Reserve be more dovish in 2024? Bitcoin is watching

The Federal Reserve has been among the most aggressive central banks since 2022, especially among the wealthiest countries. You may have doubts as to whether this will continue in the future. Some analysts don’t think so – the loosest policy would even come from the United States.

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Will the Fed cut interest rates?

This was written by CoinDesk, which read research from Deutsche Bank. Germany’s largest bank points out that traders expect the Federal Reserve to cut its key interest rate by at least 1%. Currently it is between 5.25% and 5.5%, the highest level in almost two decades.

Combine that with the strong U.S. economy and there are two reasons why the dollar has been relatively strong over the past two years. Therefore, the Fed could become a little more dovish next year. This could negatively impact the US dollar’s appeal as a good investment.

ING completely agrees. The Netherlands’ largest investment bank expects the American economy to slow next year and inflation to fall further. This gives the Fed the opportunity to loosen the reins a bit. This would also be the case for the European Central Bank (ECB), which could be forced to cut interest rates by 0.75% in 2024. Otherwise, several EU Member States would not be able to get their budgets in order.

According to CoinDesk, Bank of America also expects the dollar to be weaker next year. However, there are a number of possibilities that this will not be the case. For example, even higher consumer inflation as well as suddenly higher oil prices and a further economic slowdown in China could throw a spanner in the works.

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Recession in America?

So these three investment banks believe that the US economy will slow. It may not stay that way for a long time, as there are signs that the USA will also enter a recession. We’ll find out more next Thursday when the US gross domestic product (GDP) figures are announced. What impact this will have on Bitcoin (BTC) remains to be seen.

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